Washington Post 2013 Annual Report Download - page 90

that stock awarded to a participant will be forfeited and revert to
Company ownership if the participant’s employment terminates
before the end of a specified period of service to the Company.
Some of the awards are also subject to performance and market
conditions and will be forfeited and revert to Company ownership if
the conditions are not met. At December 31, 2013, there were
471,800 shares reserved for issuance under the 2012 incentive
compensation plan. Of this number, 91,029 shares were subject to
stock awards and stock options outstanding and 380,771 shares
were available for future awards.
Activity related to stock awards under these incentive compensation
plans was as follows:
Year Ended December 31
2013 2012 2011
Number
of
Shares
Average
Grant-
Date
Fair
Value
Number
of
Shares
Average
Grant-
Date
Fair
Value
Number
of
Shares
Average
Grant-
Date
Fair
Value
Beginning of year,
unvested ... 207,917 $350.21 77,319 $424.45 48,359 $498.95
Awarded..... 70,165 562.29 145,348 321.56 44,030 432.09
Vested....... (71,585) 515.09 (7,134) 499.06 (13,132) 722.67
Forfeited ..... (92,018) 300.86 (7,616) 417.79 (1,938) 436.31
End of Year,
Unvested ... 114,479 424.65 207,917 350.21 77,319 424.45
In connection with the sale of the Publishing Subsidiaries, the
Company modified the terms of 86,824 share awards affecting
102 employees. The modification resulted in the acceleration of the
vesting period for 45,374 share awards, the elimination of a
market condition and vesting terms of 15,000 share awards, and
the forfeiture of 26,450 share awards; the effect of which are
reflected in the above activity. The Company also offered some
employees with 26,124 share awards the option to settle their
awards in cash resulting in a modification of these awards from
equity awards to liability awards. The Company paid employees
$13.1 million for the settlement of these liability awards. The
Company recorded incremental stock compensation expense, net of
forfeitures, amounting to $19.9 million, which is included in income
(loss) from discontinued operations, net of tax, in the consolidated
statement of operations.
For the share awards outstanding at December 31, 2013, the afore-
mentioned restriction will lapse in 2014 for 10,250 shares, in 2015
for 32,453 shares, in 2016 for 21,515 shares and in 2017 for
50,261 shares. Also, in early 2014, the Company made stock
awards of 750 shares. Stock-based compensation costs resulting from
Company stock awards were $35.2 million, $11.4 million and $8.9
million in 2013, 2012 and 2011, respectively.
As of December 31, 2013, there was $29.6 million of total unrecog-
nized compensation expense related to these awards. That cost is
expected to be recognized on a straight-line basis over a weighted
average period of 2.1 years.
Stock Options. The Company’s 2003 employee stock option plan
reserves 1,900,000 shares of the Company’s Class B common
stock for options to be granted under the plan. The purchase price
of the shares covered by an option cannot be less than the fair
value on the grant date. Options generally vest over four years and
have a maximum term of 10 years. At December 31, 2013, there
were 101,194 shares reserved for issuance under this stock option
plan, which were all subject to options outstanding.
Stock options granted under the 2012 Plan cannot be less than the
fair value on the grant date, and generally vest over four years and
have a maximum term of 10 years.
Activity related to options outstanding was as follows:
Year Ended December 31
2013 2012 2011
Number
of
Shares
Average
Option
Price
Number
of
Shares
Average
Option
Price
Number
of
Shares
Average
Option
Price
Beginning
of year .... 125,694 $478.32 129,044 $494.95 87,919 $495.05
Granted ..... 15,000 373.03 7,500 378.00 51,000 499.45
Exercised .... (14,500) 391.83 ————
Expired or
forfeited . . . (4,500) 637.53 (10,850) 605.82 (9,875) 519.04
End of Year .. 121,694 469.76 125,694 478.32 129,044 494.95
In connection with the sale of the Publishing Subsidiaries, the
Company modified the terms of 4,500 stock options affecting
six employees. The modification resulted in the acceleration of the
vesting period for 4,250 stock options and the forfeiture of
250 stock options. The Company recorded incremental stock option
expense amounting to $0.8 million, which is included in income
(loss) from discontinued operations, net of tax, in the consolidated
statement of operations.
Of the shares covered by options outstanding at the end of
2013, 73,194 are now exercisable; 21,500 will become
exercisable in 2014; 17,875 will become exercisable in 2015;
5,375 will become exercisable in 2016; and 3,750 will
become exercisable in 2017. For 2013, 2012 and 2011, the
Company recorded expense of $3.5 million, $2.9 million and
$2.7 million related to stock options, respectively. Information
related to stock options outstanding and exercisable at
December 31, 2013, is as follows:
Options Outstanding Options Exercisable
Range of
Exercise
Prices
Shares
Outstanding
at
12/31/2013
Weighted
Average
Remaining
Contractual
Life (years)
Weighted
Average
Exercise
Price
Shares
Exercisable
at
12/31/2013
Weighted
Average
Remaining
Contractual
Life (years)
Weighted
Average
Exercise
Price
$369–396 . . . 44,000 7.6 $380.96 20,500 6.3 $384.82
419–439 . . . 17,694 5.4 421.75 17,694 5.4 421.75
503 . . . 50,000 7.2 502.58 25,000 7.2 502.58
652 . . . 2,000 4.4 651.91 2,000 4.4 651.91
730 . . . 5,000 2.9 729.67 5,000 2.9 729.67
954 . . . 3,000 1.0 953.50 3,000 1.0 953.50
121,694 6.7 469.76 73,194 5.9 488.13
At December 31, 2013, the intrinsic value for all options outstand-
ing, exercisable and unvested was $24.8 million, $14.0 million
and $10.7 million, respectively. The intrinsic value of a stock
option is the amount by which the market value of the underlying
stock exceeds the exercise price of the option. The market value of
72 GRAHAM HOLDINGS COMPANY